The manager says it faces challenges in funding the capital expenditures that many of its properties require
[SINGAPORE] The managers of Acrophyte Hospitality Trust are considering temporarily suspending or reducing distributions, equity fundraising or a portfolio recalibration through brand repositioning, among other options, as part of its ongoing strategy review for the hospitality stapled group.
This follows an announcement on May 30 when the managers said they were evaluating a range of options for the stapled group, including a potential transaction involving its stapled securities, in light of potential capital expenditure needs related to its portfolio’s asset enhancement requirements.
The stapled group faces “various challenges” in funding the significant capital expenditures that many of its properties require, said the managers on Monday (Jun 23).
A preliminary assessment places its capital expenditures for FY2025 to FY2027 at around US$100 million, though the amount may be higher as ongoing uncertainties in US trade and immigration policies could exert further inflationary pressure on imported materials and labour costs.
This amount comprises asset enhancement initiatives for 25 of the 33 hotels in its portfolio, in addition to regular maintenance and upkeep requirements.
While divesting relatively aged properties that require substantial capital expenditure – such as Hyatt Place Detroit Auburn Hills – is a strategy that Acrophyte has pursued, the process has been slow. This is due to a combination of factors including elevated interest rates and a large supply of hotels that are competing for sale, the managers said. Only four properties have been divested since 2023.
The managers said they are still reviewing options and there is no certainty that any transaction will materialise from the strategy review.
They urged stapled securityholders to exercise caution in dealing with their stapled securities and to refrain from taking action that could be prejudicial to their interests.
Units of Acrophyte ended Monday 1.7 per cent or US$0.005 higher at US$0.30.
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